Key Points
Copper prices have risen significantly in recent years, boosting Freeport-McMoRan's earnings.
Freeport's operating income grew 19% as average realized prices on copper sales surged.
Global demand is projected to grow 50% by 2040, providing a long-term tailwind for the copper miner.
Copper underpins much of our energy infrastructure and is becoming increasingly important for data centers, where AI clusters and massive campuses require up to 10 times the electrical power of traditional cloud infrastructure.
Because of its close ties to the power grid and data center hardware, copper stocks like Freeport-McMoRan (NYSE: FCX) have traded in tandem with AI stocks, riding the AI narrative's peaks and valleys. With the stock down 18% from its recent high, here's what investors need to know about Freeport-McMoRan.
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Freeport-McMoRan's earnings got a lift from rising copper prices
Since the start of 2024, spot copper prices have risen from $3.90 per pound to $6.67 per pound, a 71% increase. The sharp rise comes as hyperscalers invest heavily in data centers and the U.S. looks to reshore manufacturing and other industrial capabilities.
Strong copper prices have driven strong results for Freeport-McMoRan, with operating income growing 19% to $2.4 billion in the third quarter. During the period, the company sold 749 million pounds of copper at an average realized price of $6.54 per pound. Freeport expects copper sales to jump another 17% in the fourth quarter.
What's next for Freeport-McMoRan
Freeport has had a volatile year and has become closely associated with the AI data center trade. While the stock has fallen 18% recently, it's still up an impressive 30% year to date.
Looking ahead, Freeport targets copper sales of 4.5 billion to 5 billion pounds annually by 2030 by increasing its use of leach technologies, expanding its Arizona facility, and pursuing other expansion projects. According to S&P Global, global copper demand is slated to increase by 50% by 2040.
Freeport will likely see volatility as investors scrutinize hyperscalers' capital expenditures, but it should continue to benefit from tailwinds from data center growth and the power grid build-out that supports these facilities.
Courtney Carlsen has positions in S&P Global. The Motley Fool has positions in and recommends S&P Global. The Motley Fool has a disclosure policy.